Money transfers for tax refunds

ABSTRACT

Tax refunds are provided via a money transfer service. Merely by way of example, a taxpayer (or a tax preparer) might provide to the IRS an account number at a bank, as a target for a direct deposit refund related to a tax return. In an aspect, the account number might have a specific format that informs the bank that the refund is to be processed by the money transfer service, and in another aspect, the account number might include data that identifies the taxpayer to the money transfer service.

CROSS-REFERENCES TO RELATED APPLICATIONS

This application is a continuation of U.S. patent application Ser. No.13/528,601, filed Jun. 20, 2012, and entitled “Money Transfers for TaxRefunds,” now U.S. Pat. No. 8,645,268, which is a continuation of U.S.patent application Ser. No. 12/641,762, filed Dec. 18, 2009, entitled“Money Transfers for Tax Refunds,” now U.S. Pat. No. 8,229,847, which isa continuation-in-part of U.S. patent application Ser. No. 11/670,972filed Feb. 3, 2007, entitled “Money Transfers for Tax Refunds,” now U.S.Pat. No. 7,657,483. The entire disclosures of the above application arehereby incorporated by reference, for all purposes, as if fully setforth herein.

FIELD OF THE INVENTION

The present invention relates to financial transactions in general and,more particularly, to financial transactions for providing tax refundsto taxpayers.

BACKGROUND OF THE INVENTION

In recent years, the Internal Revenue Service (“IRS”), as well as manystate tax authorities, have offered to provide tax refunds by directdeposit service. This service has several advantages for taxpayers.Chief among those advantages is the speed with which the refund isreceived. Additionally, direct deposit provides enhanced convenience forthe taxpayer, since the taxpayer does not need to undertake thecumbersome process of receiving a paper check, taking the paper check toa bank or other financial institution, and cashing or depositing thecheck.

Moreover, for an unbanked taxpayer (i.e., a taxpayer who has no depositaccount with any financial institution), direct deposit traditionallyhas not been an option. In an attempt to remedy this disparity, some taxpreparers and financial institutions offer alternative products, such asrefund advances. Typically, however, these products are accompanied byexorbitant fees and burdensome procedures. Moreover, many taxpayerswould prefer to have a tax preparer's fee deducted from the refundproceeds, rather than paying this fee in advance. IRS regulations,however, prohibit direct deposits of a refund to any account not titledin the name of the taxpayer. Hence, even if the taxpayer had a bankaccount into which a refund could be deposited directly, there was noability to segregate a portion of the funds into another account tosatisfy preparer fees. To avoid this limitation, a taxpayer was forcedto undertake even more burdensome procedures, such as giving the taxpreparer power of attorney in order to allow the preparer's fee to bededucted from the refund proceeds.

Recently, the IRS has introduced a more flexible system, in which ataxpayer can designate multiple accounts (on IRS Form 8888) into which atax refund should be deposited, and the amount that should be depositedinto each account. It is anticipated that many state tax authoritieswill follow this practice as well. Conveniently, this would seem toprovide an opportunity to allow a taxpayer to have the bulk of therefund paid into his or her personal account, with some fee paid (out ofthe refund amount) separately to the tax preparer's account. However,IRS regulations specify (and Form 8888 specifically states) that each ofthe accounts must be in the taxpayer's name. Hence, in order to takeadvantage of the new Form 8888 to pay a preparer's fee, a taxpayer wouldhave to establish a separate account, in the taxpayer's name, for thepreparer, and then provide the preparer with some form of power ofattorney to access the account. This is no more desirable than priorarrangements. In addition, if a taxpayer wants to use the Form 8888 tohave a portion of their refund purchase savings bonds or fund an IDA(individual development account), they may need to have the remainingportion of their refund disbursed via direct deposit. For a taxpayerwith no bank account, this may be a problem.

Hence, there is a need for a facility to allow a taxpayer (andespecially an unbanked taxpayer) to receive a tax refund in expeditiousfashion, with an easy way of reconciling funds received through thefacility from the IRS with payments expected to be received bytaxpayers. Further, it would be helpful if such a facility also allowedfor tax preparer fees (and/or any other necessary fees) to be deductedin a convenient manner from the refund proceeds, to allow the taxpayerto avoid the dilemma of either having to pay for tax preparation servicebefore receiving the refund or undertaking the burden and expense ofobtaining a refund advance.

BRIEF SUMMARY OF THE INVENTION

Embodiments of the invention provide novel facilities (including,without limitation, systems, methods and software) for providing taxrefunds without requiring the taxpayer to maintain a deposit accountwith a financial institution. In an aspect of some embodiments, theinvention allows for one or more fees (such as tax preparer fees and thelike) to be deducted from the amount of the refund as well.

Certain embodiments employ a money transfer service to allow thetaxpayer to receive the refund (perhaps after subtracting anyappropriate fees) at a convenient location, in expeditious fashion. In aset of embodiments, for example, a taxpayer (or a tax preparer) mightprovide to the IRS (or any other suitable tax authority) an accountnumber at a bank (or other financial institution), as a target for adirect deposit refund related to a tax return. In an aspect, the accountnumber might have a specific format that informs the bank that therefund is to be processed by the money transfer service, and in anotheraspect, the account number might include data that identifies thetaxpayer to the money transfer service.

In accordance with a set of embodiments, upon receiving (e.g., from theIRS) a direct deposit of the tax refund, the bank recognizes the refundas being related to the money transfer service and initiates a transfertransaction (such as a host-to-host transaction) to transfer the refundamount, or at least a portion thereof, to the money transfer service. Inan aspect, this transfer transaction might include information (such asthe taxpayer name, and/or some other identifying information, such assome or all of the taxpayer's taxpayer identification number (“TIN”),phone number, zip code, birthdate or the like, which can allow the moneytransfer service to verify the recipient's identity).

In some embodiments, the money transfer service identifies the transfertransaction as a money transfer transaction, with the taxpayer asrecipient. The taxpayer can then request the funds, using any of avariety of methods (e.g., in person at an agent location of the moneytransfer service, by computer or telephone transfer to another accountor recipient, as a stored value card, mobile wallet, etc.) In an aspect,the money transfer service can validate the identity of the recipientusing one or more of several procedures, including without limitation achallenge question. Optionally, the money transfer service can verify apayout area for the funds, based perhaps on a location identifier (suchas a zip code, etc.) that can be a part of the account number and/or canbe included with the transfer transaction. Assuming verification of therecipient's identification and/or that the recipient is located in thepayout area, the money transfer service can provide the funds to therecipient.

Optionally, the tax preparer can provide an additional account numberwith the tax return. In an aspect, this additional account number mighthave a specific format that informs the bank that the refund is to beprocessed by the money transfer service (and/or that it relates to a taxpreparer fee), and in another aspect, the account number might includedata that allows the bank to identify an account (perhaps at anotherbank) into which funds associated with this additional account should betransferred. In this way, the tax preparer's fees can be deducted fromthe refund and provided separately to the tax preparer. (Although it isassumed, in most cases, that the tax preparer will have a depositaccount or prepaid account/card into which the fee should be deposited,if desired, a procedure utilizing a money transfer service—similar tothat used for the taxpayer's refund—can be implemented to provide thefee to the tax preparer.)

Various embodiments of the invention provide, inter alia, methods,systems and software products. In some embodiments of the invention, asystem (such as a computer system) might be configured to implement amethod of the invention. Merely by way of example, the system mightcomprise, inter alia, one or more processors, along with instructions(which might be stored on a disk and/or other computer readable medium)executable by the processors to perform the method. In otherembodiments, a software product might embody the method, for example asa set of instructions (which again, might be stored on a disk and/orother computer readable medium), which are executable by one or morecomputers to execute the method. In yet other embodiments, one or morephysical and/or tangible signals might be embedded in a carrier wave.The signals might comprise instructions executable by a computer toperform methods of the invention.

Hence, in accordance with one set of embodiments, a method of providinga tax refund might be implemented in a relationship between a taxpreparer, a financial institution, a money transfer service, and ataxpayer, a method of providing a tax refund to the taxpayer in relationto a tax return. The method might comprise creating one or more accountidentifiers. In a particular embodiment, an account identifier (whichmay or may not correspond to an actual account at a financialinstitution) might comprise a number of components.

Merely by way of example, an account identifier might comprise a moneytransfer service identifier, which can serve, in some embodiments toidentify an account (which might be a real account and/or apseudo-account) at the financial institution as corresponding to themoney transfer service. An account identifier might further comprise atax return type identifier, which designates whether a particular taxreturn (with which the account number is associated) is a federal returnor a state return, and/or a preparer identifier, which might identify atax preparer who prepared the return. In some cases, the accountidentifier might also comprise a location identifier (e.g., a zip codeidentifier), a birthdate identifier, and/or a taxpayer identifier, whichmight comprise sufficient information (such as a portion of a TINnumber, etc., to name but one example) to identify a taxpayer and/orverify the identity of a taxpayer.

The method might further comprise providing one or more such accountidentifiers as direct deposit targets for a refund associated with thereturn. (In some cases, a routing number for the financial institutionmight be provided as well.) Merely by way of example, a first accountidentifier might be a direct deposit target for a first portion of arefund, and a second account identifier might be a direct deposit targetfor a second portion of the refund.

Accordingly, in some embodiments, the method might comprises receiving(e.g., at a host computer operated by the financial institution) one ormore direct deposit transactions. These transactions might haveassociated therewith (e.g., in a field of an ACH deposit requestrepresenting the transaction) a name of the taxpayer, and/or they mightbe directed to the account identifiers provided with the tax return.

In some cases, one of the direct deposit transactions might beidentified as corresponding to a payment to a tax preparer. In suchcases, a set of preparer direct deposit information might be identified(perhaps based on a correlation between preparer identity and preparerdirect deposit information established in an earlier enrollmenttransaction), and a funds transfer can be performed to transfer some orall of the funds from that direct deposit transaction to the preparer'saccount.

Another of the direct deposit transactions might be identified asrelating to a money transfer service (perhaps based on a money transferservice identifier in the account identifier to which the transaction istargeted). Accordingly, in some embodiments, a host-to-host moneytransfer transaction might be performed (e.g., between the financialinstitution's host computer and a second host computer operated by themoney service provider). In an aspect, the host-to-host transactionmight transfers an amount of money corresponding to at least a portionof the direct deposit transaction, and/or the host-to-host transactionmight have associated therewith a set of data, such as a locationidentifier, birth date, taxpayer name, taxpayer identifier, etc. In anaspect, the taxpayer name can be derived from the direct deposittransactions and/or used as the recipient for the host-to-host moneytransfer transaction.

At the money transfer service's host computer, the transaction might bereceived and/or identified as a money transfer transaction having thetaxpayer as a recipient. In some cases, a payout area for thetransaction might be determined, based, for example, on the locationidentifier (e.g., the zip code) of the taxpayer. Upon receiving arequest from the taxpayer to receive the funds from the transaction, anamount of money corresponding to at least a portion of the amount of thehost-to-host transaction might be provided to the taxpayer. Optionally,the identity of the taxpayer might be verified (for example, byreference to the taxpayer identifier associated with the host-to-hosttransaction, and/or it may be verified that the taxpayer is within thedetermined payout area.

Another exemplary method might comprise receiving (e.g., at a first hostcomputer operated by a financial institution) a direct deposittransaction in a first amount from a governmental entity. In an aspect,the direct deposit transaction might correspond to a refund related to atax return filed on behalf of a taxpayer. In another aspect, the directdeposit transaction might have associated therewith an accountidentifier, which, in a particular embodiment, comprises a first portionhaving sufficient information to identify the direct deposit as beingrelated to the money transfer service and a second portion havingsufficient information to enable the money transfer service to identifythe taxpayer.

In some embodiments, the method further comprises identifying the directdeposit transaction as being related to a money transfer service, at thefirst host computer, perhaps based at least in part on the first portionof the account identifier. Accordingly, the method might furthercomprise performing a money transfer transaction (which might be, merelyby way of example, a host-to-host transaction from the first hostcomputer to a second host computer operated by the money transferservice). In an aspect, the money transfer transaction has a secondamount and has a recipient identifier associated with the money transfertransaction. In some embodiments, the recipient identifier is derived,at least in part, from the second portion of the account identifierand/or might comprise sufficient information to enable the moneytransfer service to identify the taxpayer as a recipient of the moneytransfer. In another aspect, the money transfer transaction might resultin the transfer of funds from an account at the first host computer toan account at the second host computer.

Yet another exemplary method comprises receiving (e.g., at a first hostcomputer operated by the money transfer service), a money transfertransaction (which might be, merely by way of example, a host-to-hosttransaction) from a second host computer operated by the financialinstitution. In an aspect, a host-to-host transaction might have a firstamount and/or a recipient identifier associated with the host-to-hosttransaction. The recipient identifier might be derived, at least inpart, from an account number provided as a direct deposit target for thetax refund. Additionally and/or alternatively, the recipient identifiermight comprise sufficient information to identify the taxpayer and/or toverify the identity of the taxpayer.

In an embodiment, the exemplary method comprises identifying, at thefirst host computer, the host-to-host transaction as a money transfertransaction having the taxpayer as a recipient, perhaps based at leastin part on the recipient identifier. Upon receiving a request from thetaxpayer to obtain funds from the money transfer transaction, the methodmight comprise providing, to the taxpayer, an amount of moneycorresponding to at least a portion of the first amount.

BRIEF DESCRIPTION OF THE DRAWINGS

A further understanding of the nature and advantages of the presentinvention may be realized by reference to the remaining portions of thespecification and the drawings wherein like reference numerals are usedthroughout the several drawings to refer to similar components. In someinstances, a sublabel is associated with a reference numeral to denoteone of multiple similar components. When reference is made to areference numeral without specification to an existing sublabel, it isintended to refer to all such multiple similar components.

FIG. 1 is a block diagram illustrating relationships between variousparties to provide a tax refund, in accordance with various embodimentsof the invention.

FIG. 2 is flow diagram illustrating a method of providing a tax refund,in accordance with various embodiments of the invention.

FIG. 3 is a generalized schematic diagram of a computer system that canbe used in accordance with various embodiments of the invention.

FIG. 4 is a generalized schematic diagram of a networked system ofcomputers that can be used in accordance with various embodiments of theinvention.

DETAILED DESCRIPTION OF THE INVENTION

While various aspects of the invention have been summarized above,certain exemplary embodiments of the invention are described in furtherdetail below. It should be noted that the embodiments discussed hereinare intended only to be exemplary and are provided for illustrativepurposes, and that they are not intended, nor should they beinterpreted, to be exhaustive or limiting descriptions of the invention.While various embodiments are described herein, one skilled in the artshould appreciate that various components, processes and/or featuresdescribed with respect to one embodiment easily can be incorporatedwithin other embodiments. Similarly, which various alternatives and/oroptional components, processes and/or features may be described, itshould be understood that the invention can, in various embodiments,omit and/or substitute such components, processes and/or features asappropriate.

In an aspect, certain embodiments of the invention include systems forproviding a tax refund to a taxpayer using a money transfer service.Such embodiments can, inter alia, allow the taxpayer to receive therefund (perhaps after subtracting any appropriate fees) at a convenientlocation, in expeditious fashion. Hence, in accordance with an aspect ofsome embodiments, a taxpayer can enjoy various benefits of a directdeposit refund, as well as other benefits (delayed payment of taxpreparer fees, etc.) without having to maintain a deposit account with abank or other financial institution.

In an aspect of the invention, a relationship exists between a taxpayer,an (optional) tax preparer, a financial institution, and a moneytransfer service. As used herein, the term “financial institution” meansany bank or other facility that provides one or more traditional bankingservices, including, without limitation, deposit accounts, check writingprivileges, participation in the automated clearinghouse (“ACH”) system,and/or the like. The terms “financial institution” and “bank” are usedinterchangeably herein, and each term should be given the broadestpossible interpretation consistent with the functions ascribed to suchterms.

As used herein, the term “money transfer service” means any entityand/or facility that can provide to a taxpayer funds from a tax refundin accordance with embodiments of the invention described herein. Suchentities and/or facilities can include without limitation, personaland/or commercial money transfer providers, bill payment serviceproviders, and/or the like. In some embodiments, other types offinancial service providers, including without limitation, financialinstitutions, tax preparers and/or the like might provide the servicesof a money transfer service, as described herein.

FIG. 1, then, illustrates an exemplary relationship 100 between ataxpayer 105, tax preparer 110, financial institution 125 and moneyservice provider 130. In an embodiment, the taxpayer approaches a taxpreparer 110 to prepare a tax return for the taxpayer. (Alternatively,the taxpayer can prepare the return on his or her own). As used herein,the term “tax preparer” (or simply “preparer”) is used to refer to anyentity that prepares tax return for the benefit (and/or at thedirection) of another, usually in return for a tax preparation feeand/or as part of a charitable enterprise (e.g., Volunteer Income TaxAssistance (“VITA”), Tax Counseling for the Elderly (“TCE”), etc.).Exemplary preparers include certified public accountants, financialadvisors, attorneys, enrolled agents, tax preparation volunteers and thelike.

In preparing the return, the preparer and/or taxpayer can specify anaccount to receive, as a direct deposit, any refund due on the return.Merely by way of example, IRS Form 1040 provides fields for a routingnumber and account number to receive a direct deposit of any refundassociated with the return. Further, as noted above, Form 8888 allowsthe taxpayer to specify up to three amounts to be deposited in differentaccounts, and to provide three different routing number/account numberpairs as direct deposit targets for these three amounts.

Once the return has been prepared, it is filed (or otherwise submittedto a tax agency 115) on behalf of the taxpayer. When referring topreparing and/or filing a tax return, this document uses the phrase “onbehalf of” in a broad sense to refer to any preparation, filing, etc. ofa tax return by a taxpayer, at the direction of a taxpayer, for thebenefit of a taxpayer, with the authorization of a taxpayer, and/or thelike. As used herein, the term “tax agency” refers to any governmentalentity and/or authority that is charged with collecting tax revenuesand/or with which tax returns must be filed. In the United States, theparamount tax agency is the IRS. Other tax agencies include, withoutlimitation state taxation authorities, departments of revenue, franchiseboards, and the like, as well as local (e.g., municipal, county, etc.)taxation authorities. If the return indicates that a tax refund is owing(and the tax agency 115 agrees with the figures on the tax return), thetax agency informs a treasury 120 that a refund should be processed inrelation to the tax return. Specifically, if the tax return provided oneor more accounts as direct deposit targets for the refund (e.g., on Form1040, Form 8888, etc.) the tax agency 115 provides this data to thetreasury 120 so that a direct deposit transaction can be processed. Likethe term “tax agency,” the term “treasury” is used broadly herein toindicate any governmental entity (and/or any associated bank, financialinstitution, fund and/or account) that serves, inter alia, to providefunds for tax refunds. Such entities can include the United StatesTreasury, as well as various other state and/or local treasurers, andthe like. In some cases, the tax agency 115 and treasury 120 may beconsolidated within a single governmental entity.

The treasury 120, then, initiates a direct deposit transaction with afinancial institution 125, using the direct deposit target(s) (i.e.,routing and account numbers) provided with the return. In the case inwhich the taxpayer 105 has provided two (or more) direct deposittargets, the treasury 120, accordingly, might initiate two (or more)direct deposit transactions.

In an aspect, particular embodiments involve the creation, as directdeposit targets, of account numbers that indicate to the receivingfinancial institution 125 that the account, instead of being a normaldeposit account, is to be used in accordance with the present invention.In another aspect, there might be two different account numbers used.The first type of account number is used for the bulk of the refundamount, while the second type of account is used for the fees due to thetax preparer (if one was used). In specific embodiments, the accountnumbers will have a predetermined format. Accordingly, if desired, thefinancial institution will not even have to have pre-establishedaccounts associated with those numbers before receiving the directdeposit transactions. Generally, to comply with IRS regulations, boththe direct deposit for the tax preparer's fee and the deposit for theremainder of the refund will be made in the name of the taxpayer, andthe accounts nominally will be in the name of the taxpayer. However,since, in an aspect of various embodiments, these accounts are transientin nature (i.e., created ad hoc for the purpose of processing the refundand automatically deleted shortly thereafter) and/or may simply bepseudoaccounts, the name of the account holder is immaterial to thescope of the invention (although, as noted above, the relevantgovernmental authorities may impose account naming requirements).

Once the direct deposit transaction(s) have been received by thefinancial institution 125, the financial institution 125 will recognizethe deposit(s) as being related to a tax return in accordance withembodiments of the present invention. Accordingly, rather thanmaintaining the deposited funds in accounts specified by the directdeposit targets(s), the financial institution 125 will initiate a fundstransfer to a money transfer service 130, for the bulk of the refund,and, if applicable, will initiate another funds transfer to a bankaccount for the preparer, at a bank 135 of the preparer's choosing. (Thedetails of these transfers, in accordance with are discussed below.)

The taxpayer 105, then can obtain the funds from the refund (minus anyapplicable fees, such as the preparer's fee and/or any other feesassociated with the refund service) in the same manner as any moneytransfer can be obtained. The preparer's 110 fee is held in his accountat his bank 135, and he can access those funds in any conventionalmanner.

A detailed illustration of this refund process will be described byreference to FIG. 2, which illustrates a method 200 of providing a taxrefund, in accordance with one set of embodiments. The method 200 willbe described herein in conjunction with FIG. 1, although it should beappreciated that the method 200 (and similar methods) could beimplemented using different components than those illustrated by FIG. 1,and that the components of FIG. 1 could operate in accordance withmethods other than the method 200 of FIG. 2. It should be noted that themethod of FIG. 2 is generalized to both the situation in which a taxpreparer's fees are to be paid out of the refund and the situation inwhich there is no tax preparer (or in which the tax preparer's fees areto be paid in some other fashion). Hence, the procedures specific to thefirst situation are indicated with broken lines, while the proceduresthat are general to both situations are indicated with unbroken lines.

In accordance with the method 200, an enrollment transaction isprocessed (block 205) for the tax preparer 110. In some cases, thisenrollment transaction is processed at a host computer maintained by thefinancial institution 125 and/or the money transfer service 130. In oneembodiment, the enrollment transaction might comprise a computertransaction involving communication between a tax preparer's computerand a host computer. In another embodiment, the enrollment transactionmight be based on a paper form completed by the tax preparer and/oranother. In yet another embodiment, the enrollment transaction might bea telephone transaction (using a voice response unit, etc.).

As used herein, the term “host computer” means any computer (or systemof computers) that can be used to process transactions in accordancewith embodiments of the invention. One skilled in the art willappreciate, based on the disclosure here, that a variety ofconfigurations are possible. Merely by way of example, in someembodiments, a host computer might comprise one or more mainframecomputers, minicomputers, server computers, and/or the like. FIGS. 3 and4, described below, illustrate various exemplary arrangements that canbe used for host computers (and other computers), in accordance withembodiments of the invention.

In an aspect, the tax preparer 110 provides a preparer identifier (orone is provided for the preparer) for the enrollment transaction. Anysuitable set of characters can be used as the preparer identifier (suchas a telephone number or TIN of the preparer, some portion of either ofthese, and/or any other suitable identifier). All that matters, forpurposes of the invention, is that the preparer identifier identifiesthe preparer 110 from among other preparers. In addition, the preparer110 provides routing and/or account numbers for an account at the bank135 in which the preparer's fees should be deposited, as well, in somecases, as other identifying information, such as the preparer's name,address, and/or the like. (It should be noted that the bank 135 might bethe financial institution 125 in certain implementations). These dataare provided as input to the financial institution's 125 host computeras part of the enrollment transaction.

Once the enrollment transaction has been completed (and/or, as part ofthe enrollment transaction), the preparer identifier is correlated withthe account and/or routing numbers provided by the preparer (block 210).Merely by way of example, in some embodiments, a database tablemaintained by a host computer might comprise a record for each enrolledtax preparer, and the table might have, as a key field, the prepareridentifier, as well as other fields for routing number, account number,preparer name, preparer address and/or the like.

When a tax return has been prepared (and/or during the preparation ofthe return), one or more account identifiers are created (block 215). Insome embodiments, two account identifiers are created: one for thepreparer's fee and another for the balance of the refund. In otherembodiments (e.g., if the preparer's fee is not to be deducted from therefund proceeds), there might be only one account number, for thebalance of the refund.

In yet other embodiments, there may be additional account identifierscreated for various other purposes (depending, in some cases, on thenumber of accounts allowed by the tax agency and/or the relevant form).Merely by way of example, in a set of embodiments, a third accountidentifier might be created to allow a portion of a refund to be usedwith a bill payment service and/or to transfer funds to a third party.Such embodiments might employ an account identifier similar to thosedescribed in detail below, which would be configured to inform the bankthat the account identifier is associated with a bill payment and/orthird party transfer service. In a particular embodiment, the moneytransfer service 130 could provide such services. In an aspect, themoney transfer service 130 might provide an interface (e.g., a web site,a telephone interface, a software program, etc.) to allow the taxpayer105 to provide instructions on how to deal with the money (e.g., towhich third party or parties the money should be sent, etc.). In aparticular aspect of some embodiments, a third account identifier mightbe used to place a portion of a refund in an account that is used to payfees associated with the money transfer tax refund service of theinvention. (In other embodiments, rather than using an account number,the taxpayer 105 (and/or tax preparer 110) might simply provide anindication (e.g., with a checkbox, etc. on a tax return) that thefinancial institution 125 and/or the money transfer service 130 isauthorized to deduct appropriate fees (for various services) from therefund amount, and that amount might be deducted from the refund andplaced in a separate account.

These account identifiers are provided as direct deposit targets for anyrefund associated with the tax return and will be used (as describedbelow) to facilitate the processing of the refund in accordance withembodiments of the invention. It should be noted, at this point, thatthe creation of the account numbers does not necessarily imply orrequire the simultaneous creation of corresponding accounts (althoughthis is possible as well). Instead, in an aspect of certain embodiments(as noted in further detail below), the financial institution 125 neednot be aware of the account number(s) until receiving direct depositstargeted to those numbers.

As noted above, in an aspect of some embodiments, the accountidentifiers comprise data and/or formatting to indicate to the financialinstitution 125 that the account numbers are to be used in accordancewith the present invention. A variety of formats are possible. Merely byway of example, in some embodiments, an account number might be asixteen digit number of the format “MMMTPPPLLLLLNNNN,” where “MMM” is astring of characters (referred to herein as a money transfer serviceidentifier) that identify the account as corresponding to the moneyservice 130, T is a type identifier that identifies the account asrelating to a federal (or state) tax refund, PPP is a string ofcharacters that identify the tax preparer 110 (this string might be thepreparer identifier mentioned above, and/or, if no preparer is used, thestring might be all zeros, etc.), “LLLLL” is a location identifier(which might be a ZIP code or another other appropriate index oflocation, such as a state or territory identifier, designated marketingarea identifier, and/or the like), and “NNNN” is a taxpayer identifier.In some cases the taxpayer identifier might be derived from and/or mightbe some portion of (e.g., the last four digits, etc.) the taxpayer's 105TIN (e.g., for an individual taxpayer, the taxpayer's social securitynumber, or for a corporate taxpayer, the taxpayer's federal employeridentification number). In other cases (such as when the taxpayer doesnot have a TIN prior to filing the return), different taxpayeridentifiers can be used, such as some derivation and/or portion of thetaxpayer's 105 phone number and/or the like. An account identifierhaving this format might be used for the account into which thetaxpayer's 105 portion of the refund.

In some embodiments, a variation of the account number described aboveis used. For example, a birthdate identifier may be used in place of alocation identifier. In such an example, the format of the number may be“MMMTPPPBBBBBBNNNN.” Here, the “MMM” identifier, “T” identifier, “PPP”identifier, and “NNNN” identifier may be as previously described. A“BBBBBB” birthdate identifier may be used in place of the “LLLLL”location identifier as described in the previous paragraph. Thebirthdate identifier may be the same length, longer, or shorter than thelocation identifier. The birthdate identifier may be subdivided into a“MMDDYY” format where “MM” represents the month in two digits, “DD”represents the day in two digits, and “YY” represents the last twodigits of the birthdate year. Those with skill in the art will recognizethat various other formats and/or combinations are possible for thebirthdate. In some embodiments, if a six digit birthdate identifier isused, the “T” identifier may not be used, thereby allowing the accountnumber to remain at 16 digits.

While in the format of the number involving the birthdate a locationidentifier is not present, location information may still be gathered ata later time when the taxpayer informs a customer service representativewhere the payout is to be received. In such a way, both location andbirthdate information may be gathered, while only birthdate informationbeing stored in the account number as described above.

In some embodiments, if the taxpayer's fee is to be deducted from therefund, a second account identifier for that refund might be created aswell. In an exemplary embodiment, the format for the second accountidentifier might be the same as for the first account number, exceptthat the MMM string might be different. Thus, for a return in which thepreparer is to receive a portion of the refund, the first account numbermight be, merely by way of example, 91101230427819876, and the secondaccount number might be 91201230427819876. In this example, the string911 would indicate that the account relates to the taxpayer portion of amoney transfer refund service of the present invention, while the string912 would indicate that the account relates to a tax preparer portion ofthe refund. The 0 indicates that this account is for a refund on afederal tax return, 123 is preparer identifier, 042781 is the birthdateof the taxpayer (representing Apr. 27, 1981), and 9876 is the last fourdigits of the taxpayer's TIN. (In other embodiments, however, theaccount identifiers for the first and second accounts might not berelated in this way. As noted above, any format that conveys thenecessary information to the financial institution 125 can be used foreach of the account identifiers.)

Various ways of creating the account numbers are possible. Merely by wayof example, if tax preparation software is used (either by the taxpayer105 him or herself, or by the tax preparer 110), the software canautomatically create the account numbers, perhaps based (at least inpart) on biographical information provided by the taxpayer/preparer tothe software. In other embodiments, the tax preparer 110 might derivethe account number(s) him or herself. However the account number(s) arecreated, they are added to the tax return (e.g., on Form 1040, Form8888, etc.) along with the routing number for the financial institution125, and, if necessary, the amount of the refund corresponding to eachaccount number is provided on the tax return. The tax return is thenfiled (block 220), either by the tax preparer 110 or the taxpayer 105,as appropriate, using any appropriate procedure (e.g., by mail,electronically, etc.), thus providing the routing numbers and accountidentifiers to the tax agency 115 as direct deposit targets for variousportions of any refund corresponding to the return.

The tax return is then processed by the tax agency 115, and if a refundis owing, the treasury 120 processes one or more direct deposittransactions having, as direct deposit targets, the provided routing andaccount identifiers. Hence, one or more direct deposit transactions,directed to the provided account identifier(s), will be received by thefinancial institution 125 (block 225). The transactions generally willbe in the name of the taxpayer, since that is an IRS requirement. Merelyby way of example, in some embodiments, a direct deposit transactionreceived from the treasury 120 might be an ACH deposit request, with thename of the taxpayer 105 as the recipient name for the deposit request.In a particular embodiment, then the direct deposit transaction (or moreparticularly, a recipient (or equivalent) field associated with thetransaction can be parsed to ascertain the taxpayer's full name, firstand last name, and/or the like). From this information, the taxpayer'sname can be derived, and/or this taxpayer name can be used as therecipient name on a money transfer transaction (as described below, forexample).

In addition, when the direct deposit transactions are received, thefinancial institution's host computer will examine the accountidentifiers to which the transactions are received. Based on the formatand/or data of each of the account identifiers (specifically, in someembodiments, the presence of a money transfer service identifier in aspecified location within the account identifier), the financialinstitution's host computer will identify the direct deposittransactions as being related to the money transfer refund service(block 230). Specifically, assuming two direct deposit transactions arereceived (a first transaction for the taxpayer's portion of the refundand a second transaction for the preparer's fee), the financialinstitution's host computer will identify the first transaction asrelating to the money transfer service and the second transaction ascorresponding to a payment to the tax preparer. Thus, instead ofprocessing the direct deposits in a traditional fashion (i.e., creditingthe funds from the deposits to preexisting accounts), the financialinstitution's host computer will process the direct deposit transactionsin accordance with embodiments of the present invention.

In an aspect of the illustrated embodiment, this processing variesdepending on whether a direct deposit transaction corresponds to the taxpreparer's portion of the refund (i.e., the fee owing to the preparer110) or the taxpayer's portion, although in some embodiments, both typesof direct deposit transactions might be processed in the same way. Ineither case, in accordance with some embodiments, an account will becreated to temporarily hold the funds from the direct deposittransaction (block 235). (In other embodiments, however, this will notbe necessary, either because an account corresponding to the accountidentifier associated with the transaction is preexisting or because itis not necessary to create an account to process the transaction—forexample, if a pseudoaccount is used.)

Hence, in an embodiment, if a direct deposit transaction is directedtoward an account identifier that indicates that the transaction relatesto a taxpayer's portion of a refund, the portion of the method indicatedby blocks 240-275 will be used. Conversely, if the account identifierindicates that the direct deposit transaction corresponds to a taxpreparer's fee, the portion of the method indicated by blocks 280-295might be used. (Once again, however, it should be noted that, in variousembodiments, the same procedures might be used to process both types oftransactions.) In many implementations, both portions of the method willbe used, since there will be two direct deposit transactions: one forthe taxpayer's portion of the refund, and another for the tax preparer'sfee.

At block 240, the financial institution's host computer performs atransaction to transfer funds to the money transfer services' hostcomputer. In an aspect, this transaction might be a host-to-hosttransaction (e.g., a Western Union® Quick Cash® transaction). Thistransaction (which will be described as a host-to-host transaction forexemplary purposes, although other types of transactions are possible aswell) effectively transfers an amount of money corresponding to thetaxpayer's portion of the refund (e.g., the amount of the taxpayer'sportion, optionally after subtracting any funds retained by thefinancial institution 125 as a fee for the service) from the financialinstitution 125 to the money transfer service 130. There generally willbe a set of data associated with this transaction. This set of datamight include, inter alia, the taxpayer's name (which might be derivedas described above), the location identifier, a birthdate identifier,and/or the taxpayer identifier. Some or all of this data might beincorporated within a recipient identifier, which might comprisesufficient information to allow the taxpayer to be identified and/or toverify the identity of the taxpayer (as described elsewhere herein, forexample). Moreover, in some embodiments, some or all of this data can bederived from the account identifier provided with the taxpayer's taxreturn and/or the taxpayer's name, in which the direct deposit was madeby the treasury 120 (which information also might be sufficient toidentify the taxpayer and/or verify the taxpayer's identity). Hence, inan aspect, the financial institution 125 simply passes on informationreceived from the treasury 120 without having to obtain any additionalinformation to process the direct deposit.

At this point, if a temporary account associated with the accountidentifier had been created, that account might be deleted automatically(block 245). Of course, if no temporary account had been created, or forany other suitable reason, this step might be omitted.

Upon receiving the host-to-host transaction (or any other suitable typeof funds transfer transaction), the money transfer service's hostcomputer identifies the host-to-host transaction as a money transfertransaction, with the taxpayer as recipient (block 250). At this point,if desired, the money transfer service 130 might notify the taxpayer 105that a money transfer has been received. Merely by way of example, inaccordance with some embodiments, the taxpayer can enroll (perhapsonline, at an agent location, by phone, etc.) using the accountidentifier (which they might have received from the tax preparer, etc.)to be informed when a money transfer associated with that accountidentifier is received. When the money transfer transaction is receivedfrom the financial institution 125, the money transfer service 130 thencan inform the taxpayer 105 (e.g., in the manner selected by thetaxpayer 105, such as by email, telephone, etc.) that the money transferis ready to be received by the taxpayer 105 (using any of the techniquesdescribed below, for example).

In any event, at some point, the taxpayer 105 will contact the moneytransfer service 130 to request the funds from the host-to-hosttransaction (i.e., the funds from the refund). This request can take avariety of forms. Merely by way of example, in many cases, the taxpayer105 will visit an agent location of the money transfer service 130 topick up the funds. Alternatively and/or additionally, facilities mightbe provided to allow the funds to be requested; merely by way ofexample, online, by phone, ATM, text messages, via financial power ofattorney and/or preauthorization, as well as a number of vehicles toprovide the requested funds (e.g., as a money transfer to another personor entity, as a transfer to another account, in the form of a moneyorder and/or stored value card—such as prepaid cards, gift cards, and/orthe like—to be mailed to the taxpayer 105, etc.). Also, the taxpayer maybe able to contact the money transfer service 130 through a service,such as an interactive voice response system, to determine the status ofthe transaction. For example, a status may include “money received andready for transactions” or “pending IRS transmission.”

Upon receiving the request (block 255), the money transfer service 130can verify the identity of the recipient as the taxpayer (block 260).This verification can take many forms. Merely by way of example, pictureidentification (or some other indicia of identity) may be required fromthe recipient (because the taxpayer's name is provided with thehost-to-host transaction, in accordance with some embodiments, thistaxpayer name can be used as the template to which any indicia ofidentity is compared). Further, since, in many embodiments, the taxpayeridentifier is provided as a portion of the recipient identifieraccompanying the host-to-host transaction, the portion of the taxpayer'sphone number, TIN, etc. that was used to generate the taxpayeridentifier can be the basis of a challenge question to provideadditional security. (If an algorithm was used to derive the taxpayeridentifier from the portion of the taxpayer's phone number, TIN, etc.,that algorithm generally can be used in reverse by the money transferservice provider 130—or, more specifically, the money service provider'shost computer—to obtain the original portion of the phone number, TIN,etc. for the challenge question.) Hence, in an embodiment, the taxpayeridentifier can be used to validate the identity of the taxpayer (or,more specifically, to identify the identity of the recipient as that ofthe taxpayer).

Optionally (e.g., for additional security), the money service providercan verify that the recipient of the funds is within a designated payoutarea (e.g., as an additional security control.) This may involve therecipient being required to provide their location to a customer servicerepresentative. Merely by way of example, if the account identifier (andhence the recipient identifier) included a location identifier (such asa zip code, etc.) for the taxpayer, a payout area for the money transfertransaction can be determined (block 265). Alternative, the zip code maybe requested from the recipient separately from during the creation ofthe account number. For instance, a birthdate may be used in the accountnumber in place of the location identifier, the recipient's zip code (orother location identifier) may still be requested, but not incorporatedinto the account number. Merely by way of example, the state in whichthe zip code is located might be determined as the payout area for themoney transfer transaction. Other payout areas might be relativelylarger or smaller. Merely by way of example, in some cases, the state inwhich the zip code is located, along with each bordering state, might bedetermined as the payout area, while in other cases, the payout areamight be limited to the zip code of the account identifier, perhapsalong with surrounding zip codes. Many variations are possible.

After the payout area has been determined, the location of the recipientat the time of payout (e.g., the agent location at which the recipientrequests the funds, the mailing address to which the recipient requestthe funds to be mailed, etc.) can be correlated against the determinedpayout area to verify that the payout location is indeed within thepayout area (block 270), providing an additional layer of security.

At block 275, the funds are provided to the recipient (whose identityhas been verified as that of the taxpayer). Any of several knownprocedures for providing funds from a money transfer can be used toprovide the funds to the taxpayer, including without limitation thosementioned above. In some cases, a fee for the use of the money transferrefund service might be deducted from the amount of the refund beforethe funds are provided to the taxpayer.

In some embodiments, if the account code indicates that a direct deposittransaction corresponds to a tax preparer's fee, a different proceduremight be followed. Merely by way of example, the tax preparer 110 mightbe identified (block 280), based, for example, on the portion of theaccount identifier that corresponds to the preparer identifier, bylooking up, in a table, the preparer's record generated during theenrollment transaction. Once the preparer 110 has been identified, therouting number for the preparer's bank 135 can be identified, along withthe preparer's account number at that bank (block 290), whichcollectively can be considered the preparer's direct depositinformation. These values can be identified by a lookup in the sametable. Once this information has been identified, a funds transfer (suchas an ACH transaction, wire transfer, etc.) can be performed (block 290)to transfer the funds (again, perhaps after subtracting any applicableservice fee) to the preparer's account. If appropriate, any temporaryaccount created in relation to the account identifier can be deletedautomatically at this point (block 295).

FIG. 3 provides a schematic illustration of one embodiment of a computersystem 300 that can perform the methods of the invention and/or thefunctions of host computer, a tax preparer's computer and/or ataxpayer's computer, as described herein. It should be noted that FIG. 3is meant only to provide a generalized illustration of variouscomponents, any or all of which may be utilized as appropriate. FIG. 3,therefore, broadly illustrates how individual system elements may beimplemented in a relatively separated or relatively more integratedmanner. The computer system 300 is shown comprising hardware elementsthat can be electrically coupled via a bus 305 (or may otherwise be incommunication, as appropriate). The hardware elements can include one ormore processors 310, including without limitation one or moregeneral-purpose processors and/or one or more special-purpose processors(such as digital signal processing chips, graphics acceleration chips,and/or the like); one or more input devices 315, which can includewithout limitation a mouse, a keyboard and/or the like; and one or moreoutput devices 320, which can include without limitation a displaydevice, a printer and/or the like.

The computer system 300 may further include (and/or be in communicationwith) one or more storage devices 325, which can comprise, withoutlimitation, local and/or network accessible storage and/or can include,without limitation, a disk drive, a drive array, an optical storagedevice, solid-state storage device such as a random access memory(“RAM”) and/or a read-only memory (“ROM”), which can be programmable,flash-updateable and/or the like. The computer system 3 might alsoinclude a communications subsystem 330; which can include withoutlimitation a modem, a network card (wireless or wired), an infra-redcommunication device, and/or the like, a wireless communication deviceand/or chipset (such as a Bluetooth™ device, an 802.11 device, a WiFidevice, a WiMax device, cellular communication facilities, etc.). Thecommunications system 330 may permit data to be exchanged with a network(such as the network 410 described below, and/or any other devicesdescribed herein). In many embodiments, the computer system 300 willfurther comprise a memory 335, which can include a RAM or ROM device, asdescribed above.

The computer system 300 also can comprise software elements, shown asbeing currently located within the working memory 335, including anoperating system 340 and/or other code 345, such as one or moreapplication programs, which may comprise computer programs of theinvention and/or may be designed to implement methods of the invention,as described herein. Merely by way of example, one or more proceduresdescribed with respect to the method(s) discussed above might beimplemented as instructions executable by a computer (and/or a processorwithin a computer). A set of these instructions might be stored on acomputer-readable storage medium, such as the storage device(s) 325described above. In some cases, the storage medium might be incorporatedwithin a computer system, such that the instructions, when executed bythe computer system, perform the procedures of the method(s). In otherembodiments, the storage medium might be separate from a computer system(i.e., a removable medium, such as a compact disc, etc.), such that thestorage medium can be used to program a generic computer with theinstructions stored thereon.

It will be apparent to those skilled in the art that substantialvariations may be made in accordance with specific requirements. Forexample, customized hardware might also be used and/or particularelements might be implemented in hardware, software (including portablesoftware, such as applets), or both. Further, connection to othercomputing devices such as network input/output devices may be employed.

A set of embodiments comprises systems for processing tax refunds,including, inter alia, providing tax refunds as money transfers. Merelyby way of example, FIG. 4 illustrates a schematic diagram of a system400 that can be used in accordance with one set of embodiments. Thesystem 400 can include one or more user computers 405, which can serveas a taxpayer's computer, a tax preparer's computer, etc., as well as aninterface to various server computers and/or host computers describedherein. The user computers 405 can be general purpose personal computers(including, merely by way of example, personal computers and/or laptopcomputers running any appropriate flavor of Microsoft Corp.'s Windows™and/or Apple Corp.'s Macintosh™ operating systems) and/or workstationcomputers running any of a variety of commercially-available UNIX™ orUNIX-like operating systems. These user computers 405 can also have anyof a variety of applications, including one or more applicationsconfigured to perform methods of the invention, such as tax preparationapplications, web browser applications and/or the like. Alternatively,the user computers 405 can be any other electronic device, such as athin-client computer, Internet-enabled mobile telephone, and/or personaldigital assistant, capable of communicating via a network (e.g., thenetwork 410 described below) and/or displaying and navigating web pagesor other types of electronic documents. Although the exemplary system400 is shown with three user computers, any number of user computers canbe supported.

Certain embodiments of the invention operate in a networked environment,which can include a network 410. The network 410 can be any type ofnetwork familiar to those skilled in the art that can support datacommunications using any of a variety of commercially-availableprotocols, including without limitation TCP/IP, SNA, IPX, AppleTalk, andthe like. Merely by way of example, the network 410 can be a local areanetwork (“LAN”), including without limitation an Ethernet network, aToken-Ring network and/or the like; a wide-area network; a virtualnetwork, including without limitation a virtual private network (“VPN”);the Internet; an intranet; an extranet; a public switched telephonenetwork (“PSTN”); an infra-red network; a wireless network, includingwithout limitation a network operating under any of the IEEE 802.11suite of protocols, the Bluetooth™ protocol known in the art, and/or anyother wireless protocol; and/or any combination of these and/or othernetworks.

Embodiments of the invention can include one or more host computers 415.Each of the server computers 415 may be configured with an operatingsystem including without limitation any of those discussed above, aswell as any commercially-available server operating systems,minicomputer operating systems and/or mainframe operating systems. Eachof the servers 415 may also be running one or more applications, whichcan be configured to provide services in furtherance of embodiments ofthe invention, including without limitation performance of methods ofthe invention (and/or various operations thereof), as well astraditional transaction processing and/or banking operations.

Merely by way of example, one of the host computers 415 may incorporate,and/or may be in communication with a web server, which can be used,merely by way of example, to process requests for web pages or otherelectronic documents from user computers 405.

In certain embodiments, the system can include one or more databases420. The location of the database(s) 420 is discretionary: merely by wayof example, a database 420 a might reside on a storage medium local to(and/or resident in) a host computer 415 a. Alternatively and/oradditionally, a database 420 b can be remote from any or all of thecomputers 405, 415, so long as it can be in communication (e.g., via thenetwork 410) with one or more of these. In a particular set ofembodiments, a database 420 can reside in a storage-area network (“SAN”)familiar to those skilled in the art. In a set of embodiments, adatabase 420 can be used to store information about transactionsprocessed by the host computers 415, and in particular can comprise oneor more tables used to store data in accordance with embodiments of theinvention.

While the invention has been described with respect to exemplaryembodiments, one skilled in the art will recognize, based on thedisclosure herein, that numerous modifications are possible. Forexample, the methods and processes described herein may be implementedusing hardware components, software components, and/or any combinationthereof. Further, while various methods and processes described hereinmay be described with respect to particular structural and/or functionalcomponents for ease of description, methods of the invention are notlimited to any particular structural and/or functional architecture butinstead can be implemented on any suitable hardware, firmware and/orsoftware configuration. Similarly, while various functionality isascribed to certain system components, unless the context dictatesotherwise, this functionality can be distributed among various othersystem components in accordance with different embodiments of theinvention.

Moreover, while the procedures comprised in the methods and processesdescribed herein are described in a particular order for ease ofdescription, unless the context dictates otherwise, various proceduresmay be reordered, added, and/or omitted in accordance with variousembodiments of the invention. Moreover, the procedures described withrespect to one method or process may be incorporated within otherdescribed methods or processes; likewise, system components describedaccording to a particular structural architecture and/or with respect toone system may be organized in alternative structural architecturesand/or incorporated within other described systems. Hence, while variousembodiments are described with—or without—certain features for ease ofdescription and to illustrate exemplary features, the various componentsand/or features described herein with respect to a particular embodimentcan be substituted, added and/or subtracted from among other describedembodiments, unless the context dictates otherwise. Consequently,although the invention has been described with respect to exemplaryembodiments, it will be appreciated that the invention is intended tocover all modifications and equivalents within the scope of thefollowing claims.

What is claimed is:
 1. A method of providing a tax refund to a taxpayerfor a tax return, the method comprising: receiving, by a financialinstitution computer system, from the taxpayer, a funds requestindicating a payment vehicle in which a first portion of the tax refundis to be disbursed; creating, by the financial institution computersystem, an account identifier comprising: an indication of the taxpayer;providing, by the financial institution computer system, the accountidentifier to a first government entity, as a direct deposit target forthe tax refund corresponding to the tax return; receiving, by thefinancial institution computer system, a direct deposit from a secondgovernment entity, wherein the direct deposit indicates the accountidentifier; and providing a first portion of the tax refund to arecipient using the indicated payment vehicle.